March 30, 2016
Borrowing For Your Small Business
by Josh Prejean, Vice President
Small business owners often find themselves with an opportunity to grow their business. This growth typically creates a need for capital, whether it be to expand to a new location or purchase additional equipment. Applying for a bank loan could be the solution, however many business owners view this process as stressful and time consuming.
Consider the following tips when borrowing for your small business:
- Preparation is key. Be prepared to talk about how much money you need, why you need it and how you plan to pay it back. Most lenders will review several years of tax returns, current financial statements and the credit history of the business owner.
- Keep it simple. When writing your loan request consider the strengths, weaknesses and opportunities associated with your business and industry. Remember to use conservative estimates when creating a budget and be prepared to explain any assumptions.
- Document your assets. Most lenders will need collateral to secure your loan. The property or equipment being acquired may not be sufficient. Examples of additional collateral may include savings accounts, investment accounts, real estate, equipment, vehicles, accounts receivable and inventory.
- Have realistic expectations. Business loans can take several weeks from start to finish depending on the complexity of the transaction. Real estate loans will usually take longer. Provide your lender with the documents requested in a reasonable time frame to prevent further delays in the process.
Following these simple steps will help in developing a relationship with your lender. In a modern world where business moves at the speed of light, building strong rapport and having open communication with your lender will pay dividends throughout the life of your business.